Westar: Interstate electricity marketplace helped keep lights on

The Southwest Power Pool’s new electricity marketplace got a trial by ice on its third day of operation, Westar officials said — and passed when power kept flowing.

The Kansas Corporation Commission heard a presentation Tuesday from Westar Energy, Kansas City Power & Light and its own staff about the first five months of the day-ahead market, which essentially has utilities show how much power they expect to produce the next day and at what price. The SPP, based in Arkansas, then chooses the cheapest sources of power available and routes the electricity through available lines to keep the power on in nine states, including Kansas.

Utilities in Arkansas, Louisiana, Mississippi, Missouri, Nebraska, New Mexico, Oklahoma and Texas also are involved.

Grant Wilkerson, director of market structure and compliance at Westar, said the marketplace had a difficult test within days of its debut on March 1 because of the cold snap gripping much of the country. Demand for natural gas exceeded supply in some areas, meaning not all utilities could get as much natural gas as they needed to run their gas-fired plants, he said.

Fortunately, plants in other areas that had better access to gas or relied on other fuels were able to step in, making sure all areas in the Southwest Power Pool had electricity, Wilkerson said.

The SPP said before the market went live that it could yield $100 million in benefits annually across the region from ensuring that the cheapest sources of power are used and that it is routed efficiently. Westar and KCC staff said they didn’t yet have data on savings, but Wilkerson said he expects the market to become more efficient as everyone gets better at forecasting electricity demand a day out. With time, they also will begin finding bigger-picture solutions, such as which areas need more investment in transmission infrastructure, he said.